EurWORK European Observatory of Working Life

Competition law and collective agreements

The Union rules on competition in Article 101(1) TFEU prohibit restrictions on competition as incompatible with the common market. Collective agreements between employers and representatives of employees in the enterprise aim, among other things, to eliminate wage competition among workers and employers by determining wages and conditions, thereby fixing the price of labour in a way which may bring them into conflict with competition law. One essential function of European trade unions is to ‘take wages and working conditions out of competition’. A fundamental principle of the EU single market – competition – confronts an established practice of collective bargaining, constitutionally protected in some Member States and a pillar of the European social model.

Albany case

On 21 September 1999, the European Court of Justice gave its ruling on a case brought by a Dutch textile company. The decision of this apparently minor affair went to the core of the relationship between trade unions and their collective bargaining activities, on the one hand, and the legal framework of the state and European Community institutions on the other. The textile company Albany was trying to exempt itself from a deal between the textile unions and employers in the Netherlands. This established a pension fund system for workers in the industry and had been made compulsory for all companies in that industry by the Dutch Minister of Social Affairs. What made their complaint interesting were the grounds: Albany used the competition rules in Article 81(1) of the EC Treaty (now Article 101(1) TFEU) as a basis for claiming that mandatory affiliation to the pension scheme compromised their competitiveness.

The Court in its ruling emphasised the social policy objectives of the Treaty – which are given equal weight to those on competition (paragraph 54); it focused on the provisions of the EC Treaty (Articles 118 and 118B, now Articles 156 and 154 -155 TFEU) and, in addition and in particular, the provisions in the (then) Agreement on Social Policy (Articles 1 and 4, now Articles 151 and 154 TFEU). These provisions explicitly stipulate the objective of social dialogue and collective bargaining between employers and workers, including this objective at EU level (paragraphs 55-58). The Court’s conclusion was: (paragraphs 59-60)

It is beyond question that certain restrictions of competition are inherent in collective agreements between organisations representing employers and workers. However, the social policy objectives pursued by such agreements would be seriously undermined if management and labour were subject to Article 85(1) of the Treaty when seeking jointly to adopt measures to improve conditions of work and employment.

It therefore follows from an interpretation of the provisions of the Treaty as a whole which is both effective and consistent that agreements concluded in the context of collective negotiations between management and labour in pursuit of such objectives must, by virtue of their nature and purpose, be regarded as falling outside the scope of Article 85(1) of the Treaty.

Insofar as national competition laws increasingly adopt the Union model, it may be that collective agreements within Member States similarly fall outside their scope. Union law may thereby have created an ‘anti-trust immunity’ of collective agreements.

Please note: the European industrial relations dictionary is updated annually. If errors are brought to our attention, we will try to correct them.
Useful? Interesting? Tell us what you think. Hide comments

Add new comment